International economic agencies are warning against a potential economic crisis around the world against the background of the ongoing war in Ukraine.
The war has erupted only a few days ago. The world has, however, already started feeling the economic heat from it and very strongly at that.
There are changes everywhere in the world around the clock. Nonetheless, some experts believe the worst is yet to come.
The global economy has not recovered from the Covid-19 pandemic yet and the Russian-Ukrainian war is already making things worse.
Inflation is growing and the war is expected to make it grow even more.
World Bank President, David Malpass, expected the economic consequences of the Ukraine war to go far beyond Ukrainian borders.
The rise in energy prices, he said, would hit poor countries the hardest.
He added that food prices have also been up because of the war, given the fact that Russia and Ukraine are major food producers.
Oil, nickel, and wheat may suffer the most, with Russia coming with big shares in the markets.
Ukraine is the world’s largest sunflower oil producer. Russia comes in second place behind it, according to S&P Global Platts, a provider of energy and commodities information.
The two countries account for 60 per cent of the global production of this commodity, it said.
Wheat prices are also expected to shoot up during the next few weeks, since Russia and Ukraine account for almost a third of global wheat exports.
Meanwhile, gold prices hit $2,000 an ounce, for the first time in almost 18 months.
Russia, the world’s largest oil exporter, delivered 8 million barrels of crude and petroleum products to global markets every day at the end of last year, according to the International Energy Agency.
Brent crude oil prices have recently soared to above $139 a barrel, the highest since the global financial crisis of 2008, as a number of major oil consumers have boycotted Russian oil, even before any official embargoes.
Nevertheless, there is no way to fill in the gap in case of imposing an all-out embargo on Russian oil.
An alternative to Russian oil cannot be realised overnight, some experts said.
“The world cannot find an alternative to Russia’s oil exports of 8 million barrels a day at this moment,” Mohammed Barkindo, OPEC’s secretary-general, said.
Like the saying goes ‘One man’s meat is another man’s poison’, Iran is expected to benefit from the war in Ukraine as world powers advance towards a deal with the Islamic Republic over its nuclear programme.
The deal can put an end to western sanctions on Iran’s oil sector by the third quarter of this year.
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